As expected IHS Automotive downgraded their 2011 sales forecast for the auto industry, the question now is how will automakers respond? GM will be sourcing its batteries for future EV’s from A123 Systems. Goodyear is researching tires that can inflate themselves while rolling along the road. All that and more, plus Peter De Lorenzo spreads his wisdom on management at Chrysler.

This is Autoline Daily for Friday, the 12th of August, 2011. I’m Peter De Lorenzo the Autoextremist, filling in for John today.

SALES FORECAST
Yesterday we reported that Rebecca Lindland, the director of Strategic Review at IHS Automotive, downgraded their sales forecast in the U.S. for the rest of this year. Now here’s why she says this will be the case.

Now we’ll have to see if automakers reduce production schedules for the 4th quarter.

GM BATTERIES
GM announced that it has selected a second battery source to power its electric vehicles. A123 Systems will provide lithium-ion batteries for GM’s future EVs, but the specific vehicles they’ll be going in will be announced later. The batteries will be produced at A123′s plant in Livonia, Michigan. GM already has a battery contract with LG Chem out of Korea which are used to power the Volt. It’s not too surprising too see GM do this because automakers don’t like putting all their eggs in with one supplier, in case something goes wrong.

FORD EXECUTIVES
Ford announced it has promoted Barb Samardzich to head of product development in Europe starting September 1st. Samardzich, who you might remember from her appearance on Autoline After Hours, will also keep her current position as Ford’s head of Global Vehicle Engineering, Noise Vibration and Harshness, and Global Vehicle Evaluation and Verification. Samardzich replaces Frank Davis who will take on a new role in the company but this is clearly a sign that Ford is grooming Samardzich for bigger things.

FULL OF AIR
Car tires are one of those things that never seem to change; they’re round and black, made of rubber and maybe some steel belts. But they always need to be inflated from time to time. Goodyear is looking to change that by advancing research on tires that will inflate themselves as they go down the road. The research, partially funded by the U.S. and Luxemburg governments, is working to produce tires that will yield better fuel efficiency by maintaining consistent air pressure. Goodyear estimates that passenger cars and commercial trucks on the road today can see between 2.5 and 3.3 percent poorer fuel economy due to under-inflated tires. So kids, check those tires!

The Sergio Show gets preachy and the media genuflects. What’s wrong with this picture? More after this…

By now we’re all familiar with “The Sergio Show” referring to, of course, Chrysler’s Uber CEO, Sergio Marchionne. The industry’s favorite micro-manager is enjoying his day in the sun right now especially thanks to some of my colleagues in the media, who are positively gushing over Sergio’s handling of Chrysler.

I’ll paraphrase some of the coverage for you. “The Sergio Show runs on espresso and three hours of sleep a night! The Sergio Show is a dynamo that will lead Chrysler and Detroit out of the wilderness! The Sergio Show is speaking – we must now drop everything and stand at attention so we can bask in his brilliance!” Or something like that.

Except that The Sergio Show is something altogether different if you step away from the hype.

That Sergio is the Opportunist of the Century certainly can’t be disputed. After all here was a guy who was basically handed the keys to Chrysler for nothing by an Obama administration desperate to keep the domestic automobile industry from imploding. And before that he made his bones in the business by “turning around” Fiat, a company so screwed-up that even if he had just reduced the espresso machine count at corporate headquarters by half he would have looked like an industrial hero in Italy, a country that, I’m sad to say, has a real problem making money in the car business (unless we’re talking about Ferrari, of course).

But Sergio suddenly acting like the Sage of the Automotive World while suggesting that he’s markedly different from his downtrodden colleagues in Detroit – at least the ones who were here B.S. (Before Sergio) – as he took great pains to point out at the annual Center for Automotive Research industry conference up in Traverse City last week, saying, and I quote, “These are business people who did not grow up and become conditioned to doing business in Detroit,” Sergio said. “They accept the challenge of the new without being afraid.”

Well I’m not buying it.

I do know this: Sergio is setting up Chrysler NOT for a long period of sustained success and growth as he insists, but for yet another looming crisis in the company’s roller-coaster history when he steps away in 2015 or thereabouts. Because he’s going to leave behind a corporate management structure that is totally dependent on one guy and a system of doing things based on that one guy. And oh, by the way, that one guy? It’s Sergio, and only Sergio.

And when you consider the possibility of Chrysler being paralyzed by chaos and indecision when Sergio walks away with his untold millions, it’s not such a “brilliant” picture for Chrysler, now is it?

I would like to see some of my esteemed colleagues in the media get over this “genuflection stage” when it comes to covering The Sergio Show, because it’s so beyond tedious now I can’t even imagine what another four years of it will be like.

The real story here is this: Chrysler’s very survival depends on Fiat and Chrysler assimilating, combining, meshing and blending their disparate endeavors together according to Sergio’s “grand plan.”

And that is still very much a work in progress and a “we’ll see” of gargantuan proportions from where I sit.

It would be nice to see my colleagues focus on that for a change.

And that’s the High-Octane Truth for this week.

Be sure to tune in for Autoline After Hours from the Woodward Dream Cruise next Thursday night. We want to thank our Signature sponsor, MOPAR, for making it possible for us to come to you live from Woodward Avenue. Join us from the biggest classic car show in the world.

And speaking of webcasts, you can catch another episode of RoundAbout LIVE tonight at 6:30PM Eastern, 3:30PM Pacific. This week Christiaan Conover from the RoundelTable podcast guest hosts, so tune in at AutolineDetroit.TV for a fun start to the weekend.

And that wraps up today’s report. Again, I’m Peter De Lorenzo the Autoextremist, thanks for watching… and this is me leaving.

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The downturn projected for automotive production/sales reinforces the idea that UAW wages/salaries/bonuses should be tied to a fair profit sharing architecture. Had the UAW ‘won’ back previous concessions, what we would have seen was increased costs, irregardless of market, and another potential slide for the auto industry just as it was getting back on its feet. Share the good times (fairly), rough out the bad times (together) and keep the industry healthy through good times and bad.

Pardon my language but WTH does FIAT know about building the platforms for new JEEPs

For that matter WTH does Chrysler know about building ANY Lancia , Maserati , Alfa Romeo ( not to mention the soon to be Ferrari SUV based on the GC )

NOTHING !

So anyone .. please ! Tell me . Why in the heck should any of us for an instant think anything Marchionne is doing at all the companies involved will benefit ANY of them , as well as the American and Italian workers .

Thanks PDL . Its about damn time someone called it like it is other than myself when it comes to Marchionne’s Madness

Not sure I can agree (yet) with the negative evaluation re “the Sergio Show.”

Why should Chrysler/Fiat concentrate on succession planning right now? Who should be groomed to take the helm in 3 to 5 years may be on Sergio’s mind but it should definitely not be his top priority yet. Peter, you pointed out that Chrysler and Fiat need to be brought together and knitted into a single functioning organization – something that is certainly not a reality at present. Give it some time then send him to the guillotine if he fails (sorry, this is Rome – put him in the catacombs!)

For now, strength at the top level of management is essential. I don’t work with the man – and he may indeed be a “difficult” boss – but we must wait to judge the results. That story is not yet written.

Hate to disagree , but the ” Story ” was written in Stone from the moment Marchionne started on his Mass Waffling Campaign , saying one thing and then 2-4 months later completely contradicting his previous statement

Add to that his unrelenting and numerous lies to both the US CDN and Italian Governments , Unions and General Public , along with his misguided strategies to save both FIAT SpA as well as Chrysler , Along with his main ally and financial contributer Berlusconi being up against the ropes , and unless someone steps in a re-buys Chrysler from FIAT , you can say Hasta La Bye Bye to both FIAT , Chrysler , Lancia , Alfa Romeo as well as Ferrari , cause they won’t be around much longer .

Strength in Upper Management ? Marchionne ? Not unless you consider the ability to spread more fertilizer per minute of speech than the best of the politicians out there a positive trait as well as a strength

Peter you are so right! Chrysler will need another bailout if the economy tanks. There is just too much HYPE being spread by Sergio’s Storm Troopers.

Chrysler need to go backwards to the late 70′s and Early 80′s and consider building basic bread and butter transportation in the form of modern “K” cars at a very affordable price with bullet proof reliabilty similar to what Hyundai is attempting to do to build market share.

When you and John were talking to Ed Welburn last night and mentioned old Chevy nameplates like “Monza” is got me wondering if we like ever see those names again?

When Chrysler took over American Motors what ever happen those nameplates like Eagle and Hornet?

GM wasted the perfect name for a Hybrid / EV when it stopped using Saturn’s “ION” nameplate. What a perfect name or a electric sub-compact car “ION”!

Sergio won’t cut it. America has rejected Fiat over, and over again. They have never been competitive here, and certainly not now. Chrysler needed a ‘signature’ car, but they refused to bring one (the Firepower would have filled that niche) and therefore will suffer and swift and unnecessary death. Giles is a farce, and Sergio can’t help. No leadership, hence the graveyard awaits…

Now they want to electrify, and complicate tires as well as every thing else in new cars, already TPMS is a pain in the a__ they tell you to use nitrogen to prevent rust from damaging the sensors, tire shops charge more to work on TPMS equipped vehicles and also to fill up with nitrogen whether you want it or not.

Almost every major automotive culture has taken its turn in trying to run or save Chrysler… Americans, then the French (Renault), then the Americans again, then the Germans, and now the Italians. You’ll note I skipped Cerberus as they neither ran nor saved Chrysler, but rather starved it. So, who will be next, if anybody? Japan? No, they had opportunities to step-in, but passed. Korea? Possibly, but they may be more likely to develop their own trucks/SUVs. China? But do they still have an appetite after the unsuccessful effort to grab Hummer?

# 10 . Yup ! That friend who I did some promotional consulting for has been screaming his head off because they ( FIAT ) keep delaying the openings of the dealerships under him . He said thats probably costing him a good $5k- 10K in commissions every month they delay the stores .

There’s NOTHING positive to report when it comes to the whole FIAT/Chrysler debacle .

I swear this Chrysler/FIAT thing is becoming like the Never Ending SAAB story . You already know what the ending will be and are just wondering how long and how much pain will be endured till we get there

I’ve seen two 500′s on the road in the last three days. Before that, I had only seen one, ever. A dealer just opened in the Orlando area, and there is one in Daytona. I don’t see how they could hope to sell 100K a year, ever, if they follow the MINI model of few dealers, mostly in metro areas. MINI keeps adding all these new models, but they don’t have that kind of volume.

All this hand-wringing over the demise of Chysler is still way premature. Did anyone really expect Peter D’s “get the two companies working together” completed in 24 months??? This saga has barely started!

You may well be correct – all of these brands may go tits up within a couple of product cycles – but let’s wait and see. Sergio may not be a visionary and may not get it right the first time but both his big company holdings have recently reported good sales numbers. About 100,000 buyers are picking a Chrysler every month.

I would love to hear more from some Chrysler insiders about how much freedom/interference they have or how much influence Sergio is exerting over their new designs. Does he listen at all?

As far as using Fiat platforms for some Jeeps, why not? The in-house designs of Compass/Patriot, and even the current Liberty were near worst-in-class from the get go. Some of these front drive Fiat platforms are actually ok, believe it or not, and should easily produce a better Compass replacement than the current one.

I see Mr AutoExtremist stops by and the cheerleaders are all wet. Now, I don’t necessarily disagree with Mr. DeLorenzo, I rather reserve judgement; but if he is right then what’s next.. Chrysler goes bankrupt, thousands of Americans loose their job – Yayy! – Is that it??
Fine! Sergio M. is a self-proclaimed Master of the Universe (A-hole) who thinks he knows more and is better than everybody else (Reminds of someone actually) and to that lets say – WE ALL can agree. But IF Mr. Autoextremist (and cheerleaders) like cry out loud “burn the Witch” You better pull Jesus out that A-hole Cave of yours so he can save Chrysler, BECAUSE There is NO ONE ELSE; and as I am someone who knows next to nothing of the American car industry (except from what I learned following Autoline) I know enough to realize that it will be really bad for America to lose Chrysler.

So, if Mr. Delorenzo (and Cheerleaders) wishes to rant and rant, rant, rant away… But you better have solutions for every rant, cause I haven’t heard one.

@ tj #12
If Magna acquired Chrysler, I suspect Magna will be a net loser in their parts business as other OEMs will not want to share profits with a competitive OEM. This is the inverse of one of the reasons GM spun-off Delphi and Ford spun-off Visteon (to allow Delphi/Visteon to grow their business and achieve better scale).

I think Sergio is Chrysler’s last hope, they either make it with Fiat or close. I keep getting the feeling that the German’s got rid of 90% of Chrysler’s R&D and Engineering so there isn’t anything left except the names and the factories. If the main problem is succession planing for the CEO they can solve that problem.
Disney had the same problem, but the share holders demanded that the the CEO come up with a suitable replacement and Micheal Eisner found Bob Iger.

Heck , since we’re all so full of it (PDL as well from how I’m reading your post ) and you’re such an expert in all things EU , lets see you pony up with an answer or two . Or are pithy insults the limit of your repertoire ?

Come on there Wonderboy . We’re waiting !

@ Andy S – #18 You’re correct in your assessment about MAGNA losing a lot of business . What you missed is that was the Threat that VW-Audi , GM , Ford and BMW held over their heads when they made the offer for Chrysler ( the Opel offer well except replace GM with Chrysler )

Fact is everyone is scared silly of MAGNA owning an Automotive manufacture , because they KNOW ( from MAGNA’s business record ) MAGNA would kick their tails from one end of Detroit to the other unless they severely got their act together .

@ Kit – #16 – Please tell me you’re joking Kit You know why JEEP shouldn’t have a Fix It Again Tony platform underneath it as well as the rest of us .

If not have a gander at FIATs reliability over EU/UK way and that’ll clear things up a bit .

BWTM @ All

Think about this for just a minute .

IF……. Marchionne was half a smart as he and his minions think he is ; Why didn’t he wait till FIAT had all its dealerships in place and the inventory to sell ( check out those dealers lots in your area to see what I mean ) before launching FIAT’s advertising and promotional campaigns ?

Because here’s a little Marketing 101 wisdom . For every day you delay the ability of ONE customer to purchase that which you are advertising , you are costing yourself at least ten potential customers down the road .

#19 Bad example seeing as how Disney isn’t exactly lighting up the profit columns over the last decade either . Fact being they’ve been up against the ropes so many times in the last 5 years its amazing they still exist .

But since you asked , and I know full well you won’t come up with any viable answers , here’s my short term solutions ;

1) Stop the FIAT debacle right now and delay all future introductions of any and all FIAT SpA products ( that includes Alfa etc SG ) until A) Product has been properly developed for the US market and B) the Dealer/Repair network is solidly in place C) There is a reasonable amount of inventory available for immediate sale .

2) Keep Chrysler as Chryslers , JEEP as JEEPS , Alfa as Alfa , FIAT as FIATs and give up on this One World One Car BS . Its never worked in the past and it won’t work now , especially with FIATs record here in the US

3) Replace Marchionne with someone who doesn’t as our American Natives would of said ” Speak with a Forked Tongue “on a daily basis .

4) Have the eldest Elkann take a stronger role in Grand Dads company and let the Investments Firm be in the hands of his younger bother and his partners

There Wonderboy . That qualify as an answer in your Dictionary ? If not well …………. ( fill in the blanks )

sergio sure has a big ego for someone that just happended to be in the right place at the right time. The only reason fiat is still around is GM had to pay fiat 2 billion dollars to get out of a partnership with them. sergio didnt make fiat more profitable, they had a 2 billion dollar windfall from GM. They are running out of money now tho and will take Chrysler down with them unfortunatly

Heck , since we’re all so full of it (PDL as well from how I’m reading your post ) and you’re such an expert in all things EU , lets see you pony up with an answer or two . Or are pithy insults the limit of your repertoire ?

Come on there Wonderboy . We’re waiting !
_____

I don’t remember claiming to be a Wonderboy, I’m the one asking. So, you first.

No .. the fill in the blank was more along the lines of placing your attitude/opinions where the sun never shines .

And …. if you’d been paying attention , no it was not the elder Elkann who placed M in the hot seat . That was a FIAT SpA Board decision made because Elkann the elder did not want an active role in running FIAT SpA , which is part and parcel why the italian and EU general public have no confidence in FIAT’s future ,assuming if the heir to the throne has none why should they .

But …… like everything else that would of required you to be paying attention and READING the news before spouting off with again your raft of pithy sub 14 year old little boys insults

As to who , well if the Elkanns had any desire to see FIAT get its head above water , it’d be John at the very least as a figure head if not actually running the show .

Last . One World Car a conspiracy theory ?

Try this one on for size ;

By 2012 you can either pay a lot of money for the upcoming Maserati SUV . A little Less for the M-B M-Class . A little less again for the JEEP Grand Cherokee . Or even less for the Dodge Durango . All the same car on the same platform

BWTM . Wait another year and you could also buy the Alfa Romeo ( code name Stelvio ) SUV as well as the upcoming Ferrari SUV . Again all based on the very same World Car

Care for another ten or so examples ? Well i haven’t the time , But heres a hint . Cadillac SAAB GM

or Dodge AMG Alfa Romeo

or Alfa Romeo KTM

and on and on and on

Still think thats a conspiracy theory ? Well if you do you’re sadly uninformed .

I find TTAC such an excellent source for auto news and I like the fact that like me, they long for the good old days of sound, basic engineering without all the razzle dazzle gizmos so prevalent in modern cars,

On a possitive note for Chry.,their Toledo,Oh. plant is in the process of enabling assembly lines to produce vehicles of ANY platform. SUV’s one day,sub-compacts the next. I think this is a great way to meet demand expectations and prevent worker layoffs. This was a practice many years ago when humans performed all the assembly and ended when robot logic could’nt keep up with the complexity. Now they can–so Chry. hopes. If this technology is’nt exported,as usual, maybe more vehicles will be made in the U.S of A! Naaaah; businesses are not loyal to any country.

@tj re. #20,
I suspect the reliability problems you cite have more to do with build quality than anything to do with the platform. The Toluca(sp?) Plant generally had ok build quality with the PT Cruiser, so should be able to do likewise with a Compass/Patriot on a Fiat platform.

I don’t understand why Delorenzo keeps bashing Marchione and Fiat as being opportunists. No one else even considered trying to straigten out Chrysler. It was a massive job and I think Sergio and company have done an excellent job under the most difficult of conditions.
Other executives in the industry realize what Sergio has done and respect him for it!

Wow…Interesting discussion on Chrysler/Fiat…As far as future Jeeps, I believe Fiat already builds some good “Jeep-like” 4WD vehicles; however, it does kind of seem like Jeep should be the all-American brand, doesn’t it…
I got a good look at the Fiat 500, last week, while taking the Dodge in for repair AGAIN, and I kind of like it…It would be a fun weekend car, but maybe just a little small…I am not sure they made the right decision with that for their first Fiat to sell…Seems to me that a sporty type car might have been a better way to introduce the FIAT name back in the US…
Seems to me that the best path for Chrysler would be mostly re-badged (cannot believe that I am saying this!!)FIAT models until they can slowly convert to all global Fiat…It is too bad to see this happen to this company, but it is the result of their own mistakes in the car business…